Business & ManagementIB

Target markets vs. market segments

Target markets vs. market segments...A distinct group of customers with similar characteristics and similar wants or needs. By dividing the market into....
Target markets vs. market segments

Market segments

A distinct group of customers with similar characteristics and similar wants or needs. By dividing the market into different segments, it is easier for a business to analyse which groups of customers buy the product and then to target these customers more distinctively.

Target markets

The market segment that a company aims to sell its product to, each with different marketing mixes.

Exam tip: One syllabus strand is also to be able to identify who the target market is, and what market segments a company might have in a case study.

Understanding the distinction between market segments and target markets is crucial for developing effective marketing strategies and product positioning. These concepts are foundational to market segmentation, a strategy that divides a broad target market into smaller, more manageable parts based on shared characteristics. Here’s a detailed exploration of both concepts and how they interrelate within the broader context of marketing.

Market Segments

Definition: Market segments are the result of the process of dividing a broad market into smaller, homogeneous groups based on shared attributes such as demographics, psychographics, geographic locations, buying behaviors, or other relevant factors. Each segment represents a group of potential customers with similar needs, preferences, and behaviors that differentiate them from the broader market or other segments.


  • Homogeneity: Within each market segment, consumers share specific characteristics that make them similar to each other and distinct from consumers in other segments.
  • Distinctiveness: Each segment is clearly distinguishable from other segments based on its unique combination of characteristics.
  • Accessibility: Segments are identifiable and accessible through marketing efforts, allowing businesses to effectively target them with tailored strategies.
  • Substantiality: Each segment is large and profitable enough to warrant separate marketing efforts and tailored product offerings.

Example: The automobile industry segments its market into categories based on vehicle type (e.g., sedans, SUVs, trucks), price range (economy, mid-range, luxury), and purpose (family, off-road, sports). These segments allow car manufacturers to design and market vehicles that meet the specific needs and preferences of different groups of buyers.

Target Markets

Definition: A target market is a specific group of consumers within the broader market that a company chooses to direct its marketing efforts and resources towards. The selection of a target market is based on the belief that concentrating on a specific group offers the best opportunity for achieving marketing objectives, such as maximizing sales, building brand loyalty, or entering new markets.


  • Focused Marketing Efforts: Marketing strategies, including product development, pricing, distribution, and promotion, are specifically designed to appeal to the chosen target market.
  • Alignment with Business Goals: The selection of a target market is strategically aligned with the company’s overall goals, resources, and competitive advantages.
  • Dynamic Nature: Over time, a business may adjust its target market in response to market changes, competitive pressures, or shifts in consumer preferences.

Example: An organic skincare brand may identify its target market as health-conscious women aged 25-45 who prioritize sustainability and natural ingredients in their purchasing decisions. The brand’s marketing efforts, including product formulation, packaging, pricing, and advertising, are tailored to appeal specifically to this group’s values and needs.

Interrelation and Strategic Implications

The process of market segmentation and the selection of a target market are closely related but serve different purposes in marketing strategy. Market segmentation is an analytical process that identifies potential groups within the broader market based on shared characteristics. From these segments, businesses then choose one or more segments to serve as their target market(s) based on strategic considerations, including the company’s capabilities, competitive landscape, and market opportunities.

Selecting the right target market(s) from the identified market segments enables businesses to concentrate their resources and marketing efforts on the most promising segments. This focused approach increases the efficiency and effectiveness of marketing strategies, improves customer satisfaction by meeting specific needs, and enhances competitive positioning by differentiating the business in the eyes of its target consumers.

In conclusion, understanding and effectively applying the concepts of market segments and target markets are essential for businesses aiming to compete successfully in today’s diverse and dynamic marketplace. By identifying distinct segments within the broader market and strategically choosing which of those segments to target, companies can develop more focused, relevant, and impactful marketing strategies that drive growth and profitability.


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